Primary menu

Tag Archives: BAL

While the sexy market as of late has been equities, certain commodities have begun to shape up nicely as well. I’ve been fairly vocal about commodities this year. My favorite market coming into 2014 were agricultural commodities, then a momentum divergence put an end to their rise, and in early August I began looking at Cotton ($BAL). Right now the Corn ($CORN) market has caught my attention as it enters a bullish period of seasonality, extremely low sentiment, and has potentially started a new up trend.

Price ActionFirst up lets look at the latest price action for Corn ($ZC_F). After the April peak, the price of corn has been in a well established down trend as we saw a 36% drop down to the October low. However, as October trading got started traders pushed corn prices above the falling trend line and we now have the beginning of a potential new up trend.

Seasonality
Commodities often see strong headwinds and tailwinds created by seasonality. The chart below is from Signal Financial Group and shows the 10-year average seasonal pattern for corn prices. It’s not hard to notice that a low is put in at the start of October. This also happens to be what we have started to see this year, with corn prices rising since the calendar closed the door on September.

Sentiment

We know that price may be starting a new up trend and it’s happening at the beginning of the bullish seasonal period for the commodity, but what’s the general sentiment towards the crop?

The following chart is from SentimenTrader and is a proprietary index that compiles sentiment data from multiple sources for different asset classes and markets. With a current reading of 32, sentiment is near Excessive Pessimism, which has led to higher prices over the last six years when this has occurred – albeit it’s only happened twice. It appears no one likes corn anymore, which makes it an interesting market to watch.

While there are plenty of stories right now about the bumper crop that farms across the country are having, we may still see the price of corn rise going into year-end. You don’t have to be a farmer or know how to drive a tractor to follow the agricultural commodity markets. If we continue to see corn prices rise, establishing a more defined up trend, then I’ll expect sentiment to improve as well as more traders, specifically trend followers, begin to take notice.Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

Commodities started off the year strong but as the crop reports started rolling in of the bumper crop that was expected for this year, prices began to fall a couple of months ago. We now have some futures markets sitting near multi-year lows, which means it might be time to start looking for interesting setups. With that, I think Cotton ($CT_F) prices may be ready to start putting in a bottom.

In this piece for See It Market I go through the latest price action of the Cotton ETF ($BAL), the bullish setup in COT data, as well as seasonal patterns.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.

While commodities have had an awful year compared to other asset categories, cotton ($CT_F) is currently flat YTD. In my commentary for TraderPlanet this week I dig into the latest price action of the cotton ETN ($BAL) as well as the seasonality characteristics and extreme in sentiment for the cotton market.

Here’s a piece:

Seasonality can be a big factor when it comes to commodities, and cotton doesn’t escape this. When looking at the average price action over the last 5 years, 10 years, 15 years, and even 20 years, its low point for cotton is often found in November with prices rising on average until March.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer. Connect with Andrew on Google+, Twitter, and StockTwits.